The Additional Buyers’ Stamp Duty (ABSD) implemented in December last year, coupled with restrictions on foreign talents after the general election could be good news for the serviced apartment market.

In a report released recently on the private property market for the first quarter, DTZ notes that foreigners have now retreated from the market, particularly in prime areas. “We expect a higher proportion of local buyers to dominate the market going forward as foreigners take time to adjust to the new 10 per cent buyer’s stamp duty they now have to pay. This will have a greater dampening effect on sales volume and prices in the prime areas,” said Chua Chor Hoon, head of Asia Pacific Research.

This means foreigners are now likely to switch from buying to renting, especially those who are in Singapore for the short to medium term but want to live in prime areas. “Corporate clients are committing to shorter-term agreements generally,” said Tonya Khong, area general manager for Frasers Hospitality Pte Ltd and president of the Serviced Apartments Association of Singapore. “At Fraser Suites, Fraser Place Roberston Walk and Fraser Place Fusionopolis, even our newest property on Fraser Residence Orchard, our residents still stay for anything from one to six months. In the past, there were more residents who would stay with us for up to four five years. We still have some, those who relish the services we offer, but not as many these days.”

Flexibility and convenience

Typically, foreigners prefer renting condominium units in prime districts, which requires them to sign a one or two year lease. Breaking the lease would be a costly, unless a diplomatic clause is included, which is subject to the landlord’s acceptance. A serviced apartment, however, offers flexibility without infringing on any standard tenancy agreement.

Frasers say serviced residences are still very much the preferred choice for those on projects, families that are relocating before they find a more permanent home and even those on longer stay holidays. “Serviced apartments offer bigger spaces, typically with separate living areas, a kitchen, washing machines and dryers, in addition to full fledged facilities of hotels, like swimming pools and gyms, steam/sauna facilities.

In addition, Frasers properties also cater to children with the elaborate Kids Club facility and activities,” said Khong.

Strong demand

Market leaders say demand has been strong. Last year, occupancy across Far East Hospitality’s portfolio of hotels and serviced residences averaged over 80 per cent. “Singapore has been the choice destination hub with its good and secure infrastructure of services from banking and finance, medical and education, to hospitality and tourism, making it ideal for businesses and meetings, ” said Raphael Saw, chief operating officer, hospitality business group & director, hospitality operations at Far East Organization. “The role of Low Cost Carriers (LCC) is also growing in significance, making Singapore a key hub for regional, and now, long haul LCC. With this, coupled with the other trends outlined, more visitors are coming to Singapore, in particular those from Asia and Australia.”

Meanwhile, Ascott is reporting an average occupancy of about 85 per cent so far this year across its Singapore properties. “In Singapore, demand for serviced residences has been very strong, driven by the inflow of foreign direct investments, the increasing number of multinational companies setting up their operations in Singapore and Singapore being a key player in the MICE market in the region,” said Alfred Ong, managing director for South East Asia and Australia, The Ascott Limited. As of 2012, Ascott operates 908 apartment units across eight properties in Singapore which include Ascott Raffles Place, Citadines Mount Sophia, Somerset Bencoolen, Somerset Liang Court, Somerset Orchard, Somerset Grand Cairnhill, Riverdale Residences and The Heritage. Explaining the rosy outlook, Ascott said Singapore is a key business and leisure hub.

“Singapore continues to attract business and leisure travellers as the government implements various initiatives to reinvent Singapore as an exciting leisure destination and strengthen the country’s position as a leading convention and exhibition city in Asia. We continue to actively look for opportunities to expand our presence in the country,” said Ong.